Thanks Eric. So a couple of things for me to look at there. One thing I noticed there is that phone calls are not in the list of wifi activities. As one of the posters there discussed he had his airport as a bridge. I do as well. The way he fixed it was to open wifi on first router. That's not possible for me as first router is high end router that does not support wifi. Will have to think on changing airport out of bridge mode as my setup relies on rules setup on first router.

Changed my airport to DHCP instead of bridge, adjusted the assignable ranges and restarted it. Turned off BT on phone, walked to very far end of wifi range away from phone (why not) and was able to use everything on watch including messages, weather, music controls (although away from phone this is pointless) AND - drum roll - Phone calls.

UPDATE: Important to connect to phone over BT once before going to WiFi with watch.